Not upheld: early settlement charges and interest application complaint against Barclays Bank UK PLC trading as Tesco Bank

Decision detail

Summary

Mr M obtained a personal loan from Tesco Bank in November 2025 to purchase a car. After requesting the dealership return the car due to dissatisfaction, Mr M contacted Tesco Bank on 3 December 2025 to repay the loan once he received the refund from the dealership. Tesco Bank provided an early settlement figure that included interest, as Mr M was outside the 14-day withdrawal period. Mr M complained that it was unfair to charge interest given he acted promptly and the delay was caused by the dealership. The ombudsman did not uphold the complaint, finding that Tesco Bank correctly applied interest in accordance with the loan agreement terms and was not responsible for the dealership's delay.

The Ombudsman's reasoning

The ombudsman found that Tesco Bank acted fairly and in line with the loan agreement terms and conditions. The 14-day withdrawal period without interest ran from 3 November 2025 (when notification of loan opening was sent), and Mr M contacted Tesco Bank on 3 December 2025, which was outside this period. While the ombudsman acknowledged Mr M's frustration with the dealership's delay, they determined it was not fair to hold Tesco Bank responsible for the dealership's actions. The ombudsman also noted that Section 75 of the Consumer Credit Act 1974 did not apply as this was a personal loan with funds paid directly to Mr M, not a debtor-creditor-supplier agreement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website